Special Report: Global Financial Crisis
The undated photo shows the gate of
headquaters of the Ministry of Finance in Beijing. Total executive pay for
2008 at financial institutions - which many are still computing - must not
surpass 90 percent of the 2007 levels, the Ministry of Finance (MOF)
announced yesterday.(Xinhua file Photo)
BEIJING, April 9 (Xinhua) -- The Ministry of Finance
has imposed a pay cap for top executives at state-owned financial institutions
as the financial crisis eroded earnings of such companies in 2008, the ministry
said Thursday in a circular on its website.
The new rule, which came out amid rising public
grumbles about huge pay packages for top executives at state-owned financial
companies, outlined the basic line that pay for executives in 2008should be no
more than 90 percent of the level in 2007.
As of 9 p.m., two hours and half after the news was
posted on the web Sina.com.cn, 584 netizens made comments. Nearly all of them
were supportive of the move.
Under the plan, pay refers to pre-tax income,
including salary, bonus, and social insurance.
The rule would enhance equal income distribution and
push forward reform in pay mechanism, according to the ministry.
The circular said it was in line with the current
domestic and international situation for executives at some state-owned
financial institutions to voluntarily cut their pay despite their companies
posted rising profits.
Companies which had a declining income last year
should slash another 10 percent based on the basic line. Reductions should be
deeper if companies suffered steep drop in profits, according to the circular.
The ministry demanded to narrow pay gap among
executives at companies in the financial sector, calling for bigger cuts for
those who received much higher pay than the average in 2007. Caps were also
urged to be imposed on pay for staff at financial companies to make a clear
difference in posts and performance.
It is the second time that MOF had set such pay
limits. In an earlier circular in February this year, MOF ordered that the 2008
salary for top executives of state-owned financial institutions should be
limited within 2.8 million yuan (about 410,000 U.S. dollars).
The new move aimed at avoiding salary competition
between some financial institutions when deciding the salaries for their
executives in 2008, said Guo Tianyong, a professor at the China Central Finance
It is necessary to put a cap on executive salaries to
prevent unfair distribution of income and a larger gap between the rich and
poor, he said.
In March, the government ordered a crackdown on
government "hospitality" budgets, including a 15-per-cent cut in car-buying and
fuel funds as well as an across-the-board halt to the building of any new office
compounds before the end of 2010.
Chinese Premier Wen Jiabao said the government should
take the leading role in promoting frugality and should ensure government
spending goes where it is most needed amid the economic crisis.
China orders end to speculative
derivatives trading by central SOEs
BEIJING, March 24 (Xinhua) -- China's State-owned Assets
Supervision and Administration Commission (SASAC) tightened the rules Tuesday on
the conditions under which central state-owned enterprises (SOE) could use
In a statement, SASAC said the low risk awareness of
a few SOEs had presented a serious danger to state assets' safety. Full story
Executive pay ignites public grumble,
regulation urged in China
BEIJING, Feb. 9 (Xinhua) -- Guotai Jun'an
Securities, a brokerage with the government holding a majority stake, bowed to
public pressure on Monday by disclosing its executives' pay details in attempts
to prove they were not overpaid.
The pay for a director on the board was 830,000 yuan
(about 121,522 U.S. dollars) last year while executives above assistant
president level received 570,000 yuan per person on average. Full story
China tells state financial-sector
companies to curb executive pay
BEIJING, Jan. 26 (Xinhua) -- State-owned enterprises
(SOEs) and state-held companies in the financial sector should keep management
salaries at a "reasonable" level, the Ministry of Finance said in a notice
The notice said the goal was to avoid huge gaps
between such salaries and those of lower-level employees in such organizations,
as well as the general public. Full story
China's SOEs told to be fiscally
prudent in '09 budgets
BEIJING, Oct. 14 (Xinhua) -- China's government says
state-owned enterprises (SOEs) should exercise prudence when investing in 2009
to prevent financial crisis as the global economy teeters on the brink of
The State-owned Assets Supervision and Administration
Commission (SASAC) made the request in a circular issued late Monday. It's the
first time SOEs have been asked to be cautious about investment budgets in stock
markets and futures markets. Full story